May 01, 2025
What You Need to Know: CMS finalized 2026 Medicare Advantage and Part D policies, boosting plan payments by 5% and adopting modest reforms—while physician payments remain unchanged, underscoring the need for broader Medicare payment reform.
The Centers for Medicare & Medicaid Services (CMS) has finalized policy and payment updates for Medicare Advantage (MA) and Part D plans for Calendar Year 2026, with several provisions that directly affect physicians and patients in California.
Key highlights include:
- MA Payment Increase: CMS projects a 5.06% average increase in MA plan payments for 2026, driven by a 9.04% effective growth rate. While this boost helps MA plans manage higher-risk patient populations, physician groups—including the California Medical Association (CMA)—remain deeply concerned about the growing disparity between the MA increases for health plans and the stagnant or declining physician fee schedule payment rates over the past five years.
- Prior Authorization Reforms: CMS finalized important updates to prior authorization rules:
- MA plans must now honor inpatient prior authorization approvals through a patient’s discharge.
- Appeal rights have been expanded to cover decisions made during ongoing treatment. These changes are a step towards reducing administrative burdens and improving continuity of care.
- Part D Coverage Updates:
- CMS declined to expand coverage to include anti-obesity medications for weight loss, citing statutory limits and high projected costs.
- In line with the Inflation Reduction Act, CMS will eliminate cost-sharing for adult vaccines and cap cost-sharing for insulin products.
- Guardrails on Artificial Intelligence (AI): CMS acknowledged concerns about the use of AI in utilization management and plans to continue evaluating how to ensure algorithmic tools do not exacerbate health inequities, though no specific rules were issued.
Read the CMS final rule fact sheet here.
CMA continues to advocate for broad Medicare payment reform
While hospitals, Medicare Advantage plans, and other providers receive annual updates that account for inflation and rising costs, physicians remain the only provider group without an automatic inflationary adjustment in their payment formula. Instead, Medicare physician payments are based on a flawed system that has resulted in cuts or flat funding year after year—even as the cost of delivering care continues to rise.
CMA is working with national partners and Congress to fix this broken system and ensure physicians receive sustainable, predictable reimbursement that reflects the realities of modern medical practice. Without meaningful reform, continued financial pressure will threaten access to care for patients across California and beyond.